Amazon rocks Woolworths’ share value

Amazon’s plan to disrupt global retailers hit another peak this week with its acquisition of the US retailer Whole Foods, sparking concern that its eventual launch into the Australian market is closer than originally thought.

Woolworths’ share prices took a hit following the announcement, dropping by 4% from $26.25 down to $25.33, its biggest decline since November.

A spokesperson for Woolworths told C&I Week it welcomes competition and focused on putting its best foot forward regardless of what its competitors do.

“At Woolworths, we’re committed to providing our customers with great quality products at a great price both online and in-store,” they said.

“We’re proud of our fresh food credentials, with 96% of all our fruit and vegetables sourced from Australia.”

The latest acquisition has analysts suggesting that the online retailer was preparing to roll out its products and services sooner than expected, with new plans to include a fresh food offering.

JP Morgan analyst Shaun Cousins said Amazon’s entry into the Australian market is now more likely, the AFR reported.

“The more likely prospect of an Amazon Fresh offer is in our view a negative for all food retailers in Australia,” he said.

Bankrate.com analyst Mark Hamrick said: “This is an earthquake rattling through the grocery sector as well as the retail world.”

The acquisition of Whole Foods will set Amazon up in over 400 brick and mortar retail locations across the US, allowing them to build on their existing customer base, in store with an already thriving fresh food market.

Australian Retailers Association executive director Russell Zimmerman said it’s probably too early to be talking about the issue.

“Amazon is coming and we don’t know when, obviously buying Whole Foods could mean that they are looking very closely at a competitive market here in Australia on the grocery and retail food areas,” he said.

“We do not know where Amazon are going to set up; we need to understand when and where Amazon will actually open and no one other than Amazon can tell us,”

“The main thing is for retailers to get prepared and understand so that retailers will be able to support themselves in a competitive environment.”

Amazon’s former global logistics senior manager Brittain Ladd said earlier this year that Amazon were expanding into Australia, in a statement made to Gizmodo.

Mr Ladd also reflected on the Amazon Fresh grocery delivery service saying that Amazon’s Fresh site would also be launching in Australia.